With today marking Global Ethics Day, an opportunity is offered to organisations around the globe to reflect upon how they are responding to recent challenges, economic pressures, regulatory developments and heightened compliance risks, and how their decisions and practices have encompassed ethical practice.
Organisations are currently experiencing some of the most challenging and disrupting times to normal business practices. Business leaders must reflect and adapt quickly to a constantly evolving and challenging compliance and regulatory landscape under enormous financial pressure. Similarly, ethics and compliance professionals must ensure that they are familiar with these changes, are able to identify and manage new and / or heightened compliance risks, and communicate these across business operations, whilst continuing to monitor and respond to an evolving compliance landscape.
In responding to these new challenges, it is important that organisations ensure they maintain their organisation’s moral compass, that they do the right thing and adopt – both now and in the future – an ethical corporate culture.
The importance of adopting an ethical culture
Clear ethical values can offer invaluable guidance to organisations, helping them ensure they act as responsible members of society, and accord with the legitimate ethical expectations of employees, stakeholders and the general public.
Whilst the challenges brought about by the crisis have the potential to jeopardise ethical business conduct, these challenges can also act as a catalyst for change. Business leaders can take this moment to place ethics and integrity at the centre of their business operations, taking the opportunity to review current compliance programmes, assess the corporate culture of the business, and to strengthen internal procedures to enhance ethical conduct. In doing so, they will be demonstrating to their stakeholders that they are committed to doing the right thing by adopting ethical conduct, and their preparedness to continue to do so in the future.
Whilst laws are clearly defined enforceable obligations that require certain prescriptive compliance behaviour (often grounded in moral and ethical values), ethics instead represent the principles and values that society has consensually recognised as being ‘accepted behaviours’. Unlike laws, they are not, however, enforceable and can be subject to personal interpretation. As a consequence, undertaking to do what is ethical may lead to varying perspectives.
Embedding ethical values within an organisation
Business practices that may be perceived as being unethical in one jurisdiction but viewed as accepted behaviour in another, presenting some questions for companies that operate over multiple jurisdictions.
Despite resistance from local employees who may oppose changes in business practices (for example, arguing that the new requirements may make them uncompetitive in the local market), it is important that organisations seek to achieve the highest ethical standards across their global business operations, and that they consistently apply these principles. This will help ensure that ethical values are embedded in an organisation’s culture, regardless of geographical location.
So how can businesses ensure their organisation has an ethical culture? This will require some consideration of the following:
- Is there a clear tone from the top in terms of communication and conduct?
- Are ethical values consistently incorporated into communications (both internal and external) and staff training?
- Are there regular discussions and engagement with ethical values across the business so that ethical thinking is an established part of the decision-making process?
- Is ethical dialogue a two-way process? Does the organisation openly advocate the importance of speaking up, encouraging individuals to come forward with their concerns, without the fear of retaliation
- Does the organisation take prompt, appropriate and effective remedial action when unethical behaviour is identified? Does it communicate information to staff about what remedial measures the organisation has subsequently undertaken?
Identifying the status of an organisation’s ethical culture and paying close attention to current business practices is the first step to improving an ethical culture within an organisation, yet embedding ethical values therein will require time. It will be aided by the following:
Tone from the top – the promotion of ethical behaviour has to start in the boardroom so that ethics is a standard part of boardroom decision-making. It is important that whilst decisions are often based upon economic calculations, ethical considerations are not ignored, and that the performance expectations the Board places upon its staff are not unrealistic and could not only be achieved by acting in an unethical manner.
Senior leaders must openly advocate and adopt ethical leadership, encompassing ethical principles into their everyday business practices; they must be prominent – both within the business and externally – in advocating and vocalising the organisation’s ethical commitments.
In addition, since employees often emulate behaviour from their business leaders, when senior management commit to ethical values, similar behaviour is often adopted by employees across business operations.
Communication and training – in communicating an organisation’s commitment to ethical values, organisations are often documenting a company’s ‘ways of working’, or ‘code of ethics’ which articulate the clear ethical values of the business. This provides helpful guidance to staff, but also importantly provides some relevant case examples demonstrating how ethical practices are directly relevant to business operations.
The way that messaging is communicated is also as important as the content. Organisations are now exploring the effectiveness of their existing communication mechanisms, adapting their internal communication strategies to encompass a broader range of tools (including social media and an increased digital presence) to reflect the changing manner by which individuals receive and digest information.
Ethics as an established part of decision-making – through consistent references to ethical principles in communications and training, an organisation can enhance the prominence of ethical values in everyday business operations, ensuring that ethical values become a standard benchmark by which decisions are referenced, helping to embed a more consistent corporate ethical culture within the business.
Ethical dialogue as a two-way process – for an ethical culture to be properly entrenched within a business, communications must become a two-way process. Just as an organisation needs to ensure that it is vocalising the ethical values upon which the organisation conducts its business, it must also create a culture that encourages individuals to speak up to report unethical behaviour.
Barriers within a business that prevent open communications, leading individuals to fear possible retaliation if they do speak up, inevitably strikes a harmful blow to the potential for building a successful ethical corporate culture within an organisation. It is important that organisations work to reinforce the value and pride that they place on individuals speaking up and embracing ethical practices, so that speaking up becomes a respected, rather than feared, practice.
Prompt appropriate and effective remedial action – individuals also need to trust that if they do speak up, their organisation will listen, engage, and do the right thing. Through messaging from senior management that reporting suspected misconduct can be beneficial to an organisation, and through appreciation of the courage that it takes for individuals to speak up, an ethical culture will be enhanced within an organisation. Moreover, if unethical behaviour is identified and remedial action is undertaken, where it is appropriate to do so, organisations will benefit from updating their employees, highlighting that sanctions and consequences will result if misconduct is identified.
Establishing a strong ethical culture within an organisation takes time. It requires considerable commitment, communication and collaboration within an organisation to entrench ethical values across business operations.
Yet at a time when businesses are facing increased scrutiny from regulators, employees and the public alike, creating ethical culture across an organisation can bring significant benefits, including new customers and business partners, improved staff retention, and a stronger and enhanced public reputation.
During the crisis, we have seen numerous positive media stories and favourable public responses to organisations that have offered their expertise and resources to help provide emergency support to those in need; repurposing their businesses to produce PPE or hand sanitiser; adopting pay cuts at a senior level to prevent company redundancies at a junior level; or pledging financial support to community projects. Adopting an ethical culture can therefore help companies become stronger and more united.
In contrast, getting it wrong, even if the conduct is not illegal, can be just as significant. As we have seen in recent months, organisations that have sought to profiteer during the crisis; failed to safeguard the health and wellbeing of staff through appropriate PPE and social distancing; or rewarded senior management with significant pay-outs whilst simultaneously making employees redundant or reducing junior level salaries; have suffered through negative media headlines, social media criticism, customer boycotts, a fall in market share and public shaming.
Whilst there is no one-size-fits-all approach to creating an ethical culture within a business, Global Ethics Day and the current crisis offer a time for reflection, to consider an organisation’s corporate culture and, if needed, to reset its moral compass.